Data Entry: Net Worth

Congratulations! You're making fantastic progress.

This step, Step 4: Net Worth, is where all the fun happens. Here you will learn how to link bank accounts, investment accounts, and other client assets. Taken together, the items added here will populate the left-hand menu in the Client's Profile.

For a brief overview of entering net worth into a financial plan watch this short video.


For many details entered into a client's Net Worth, users can decide whether the assets are included in the retirement projections or not.

If an account is set to “Balance sheet only”, it will display as part of the net worth and be included in the balance sheet. But will NOT be included in any of the retirement projections or calculations within the financial plan.

Bank Accounts

Enter bank accounts manually using the Add Account button.

Select the type of account and indicate the balance. This will be a static number — only linked accounts have the ability to remain up-to-date. Bank accounts are usually projected as cash but some settings allow bank accounts to be grouped with taxable investment accounts. Click here to learn more about cash management settings. Bank accounts can be owned by the client, co-client, joint, or trust owned.

Seamlessly up to date

If you are a Premium or Platinum subscriber, you or your clients can use the Yodlee aggregation to link bank accounts and credit cards.

Credit Cards

Enter credit cards manually using the Add Account button.

To reflect clients paying off their credit card each month, select Pay in full on the Monthly payment amount. Take full advantage of up-to-date information by linking credit card accounts.

Investment Accounts

There are three ways to enter investment accounts into a financial plan. In each data entry method the asset allocation for accounts can be adjusted as needed. The asset allocation for each account will be used to project an annual rate of return and standard deviation used in the Monte Carlo analysis.

The account type, and owner, play an important role in determining how the funds are treated in future cash flow projections.

1

Account Integration

Integrate outside accounts through an integration partner to link clients' investment accounts with their financial plan. Click +Link Account, click Integration, and select the name of the integration partner to bring up the interface to link accounts.

Once accounts are linked through integration, users can view or adjust the asset allocation pie chart by clicking the green "based on holdings / asset class" link to the right of "Asset allocation".

There are three options for determining the asset allocation for integrated accounts:

  1. Based on holdings / asset class: In this scenario RightCapital will calculate the asset allocation based on the holdings that are linked to the account.

  2. Customized: Allows the user to specify the asset allocation by entering in percentages for each asset class. In this scenario the linked holdings are used to assign the current dollar value while the customized asset allocation will be used to assign growth and standard deviation used in Monte Carlo analysis. When choosing a "customized" asset allocation the default breakdown is 100% ‘Other’. In order to apply the customized asset allocation users must click "save" on the bottom right. Current total must equal 100% in order to save the information.

  3. Based on model portfolio: Allows the user to choose any model portfolio available to them. If this option is chosen, the allocation for the account will be set to the asset allocation of the selected portfolio. In this scenario the linked holdings are used to assign a current dollar value while the model portfolio is used to assign the account growth and standard deviation in the Monte Carlo analysis.

    There are seven default model portfolios included in RightCapital. Additional portfolios can be imported through the Riskalyze integration or added manually in the Advisor Portal > Models > Portfolios area.

2

Account Aggregation

Premium or Platinum subscribers can use the Yodlee aggregation (either the advisor or the client) to link their investment accounts by clicking the green +Link Account > Aggregation button.

Once accounts are linked through aggregation users can view or adjust the asset allocation pie chart by clicking the green "based on holdings / asset class" link to the right of "Asset allocation".

There are three options for determining the asset allocation for aggregated accounts:

  1. Based on holdings / asset class: In this scenario RightCapital will calculate the asset allocation based on the holdings or asset classes that are linked to the account.

  2. Customized: Allows the user to specify the asset allocation by entering in percentages for each asset class. In this scenario the linked holdings are used to assign the current dollar value while the customized asset allocation will be used to assign growth and standard deviation used in Monte Carlo analysis. When choosing a "customized" asset allocation the default breakdown is 100% ‘Other’. In order to apply the customized asset allocation users must click "save" on the bottom right. Current total must equal 100% in order to save the information.

  3. Based on model portfolio: Allows the user to choose any model portfolio available to them. If this option is chosen, the asset allocation for the account will be set to the asset allocation of the selected portfolio. In this scenario the linked holdings are used to assign a current dollar value while the model portfolio is used to assign the account growth and standard deviation in the Monte Carlo analysis.

    There are seven default model portfolios included in RightCapital. Additional portfolios can be imported through the Riskalyze integration or added manually in the Advisor Portal > Models > Portfolios area.

3

Adding Accounts Manually

Enter account information manually by using the Add Account button to enter an Investment account.

Use the 'Account type' drop-down box to choose the type of account.

Use the 'Entry method' dropdown menu to choose to “Enter holdings / asset classes” or “Enter total balance”.

  • When selecting the "Enter holdings / asset classes" method there are two ways of indicating the account’s value:

    1. Use Add Holding to enter in specific tickers for stocks or mutual funds — in which case Morningstar data will be used to update price information on a daily basis.
    2. Use Add Asset Class to provide a broad allocation mix — either Equity/Fixed Income or broken out using Morningstar asset classes.

    Once holdings and asset classes are entered into an account users can view or adjust the asset allocation pie chart by clicking the green "based on holdings / asset class" link to the right of "Asset allocation".

    There are three options for determining the asset allocation for manual accounts using the "Enter holdings / asset classes" method:

    1. Based on holdings / asset class: Only available when the Entry method is set to “Enter holdings / asset class”. In this case RightCapital will calculate the asset allocation based on the holdings or asset classes that are entered or linked to the account.

    2. Customized: Allows the user to specify the asset allocation by entering in percentages for each asset class. In this scenario the entered holdings and asset classes will be used to assign the current dollar value while the customized asset allocation will be used to assign growth and standard deviation used in Monte Carlo analysis. When choosing a "customized" asset allocation the default breakdown is 100% ‘Other’. In order to apply the customized asset allocation users must click "save" on the bottom right. Current total must equal 100% in order to save the information.

    3. Based on model portfolio: Allows the user to select any model portfolio available to them. If this option is chosen, the asset allocation for the account will be set to the asset allocation of the selected portfolio. In this scenario the entered holdings and asset classes will be used to assign the current dollar value while the model portfolio will be used to assign growth and standard deviation used in Monte Carlo analysis.

      There are seven default model portfolios included in RightCapital. Additional portfolios can be imported through the Riskalyze integration or added manually in the Advisor Portal > Models > Portfolios area.

  • When selecting "Enter total balance" method users can simply enter the total account balance then edit the asset allocation by clicking the green "customized" link next to "Asset allocation". There are two options for assigning allocation in the dropdown menu for the "Enter total balance" method.

    1. Customized: Allows the user to specify the asset allocation by entering the percentages of each asset class. This is the default value when entering a new manual investment account with the "Enter total balance" method. The default asset allocation is 100% 'Other'. This means if a user enters a new investment account, but does not update the asset allocation percentages, the account will display as 100% 'Other'. In order to apply the customized asset allocation users must click "save" on the bottom right. Current total must equal 100% in order to save the information.

    2. Based on model portfolio: Allows the user to select any model portfolio available to them. If this option is chosen, the asset allocation for the account will be set to the asset allocation of the portfolio selected in the dropdown menu.

      There are seven default model portfolios included in RightCapital. Additional portfolios can be imported through the Riskalyze integration or added manually in the Advisor Portal > Models > Portfolios area.

Loans

If you are a Premium or Platinum subscriber, you or your clients can use the Yodlee aggregation to link their loans.

Use Add Account to manually add mortgages, home equity, car, or student loans.

For more information on how to enter specific loans, see the Loan Details page.

Property

Click on Property in the left-hand column to enter information about the Primary Home. Indicate whether the primary home is rented or owned using the drop-down and provide the relevant information.

Use  Add Account > Property to add additional properties - Options include Investment Property, Vacation Home, and Land. Land will be treated similarly to an investment property with the distinction that Land does not allow for depreciation.

Selling an investment property

RightCapital allows you to model the financial impact of selling an investment at a future date. Simply use the drop-down menu next to Year of Sale to indicate when the investment may be sold.

The net sale proceeds are calculated as the sale price minus any outstanding loan balance and any expenses. Net proceeds will be included in that year's cash flow. If the client setting uses Traditional Cash Flow, any positive cash flow generated will be invested in the taxable account based on the current or proposed asset allocation.

Taxes - RightCapital executes very comprehensive tax calculations related to investment properties. This includes schedule E, passive loss limitation, at risk limitation, Sale of Business Property as well as Schedule D 1250 Gain calculations.

1031 Exchange - In order to illustrate a 1031 Exchange visit the Profile > Goals > Add Goal > Property > select Investment Property Purchase > Adjust the 1031 Exchange dropdown menu in the data card. For additioanal information on the 1031 exchange visit the article for Data Entry: Property Goals.

Insurance

Enter a variety of insurance policies can using  Add Account > Insurance, including cash value policies and long-term care policies. See additional information on entering Insurance policies.

Other Assets

To add a business as an asset, or other unclassified assets, click Add Account and select Other:

Lifestyle - Use this to include the current value of various tangible assets in the client's Net Worth such as a car or jewelry.

Note receivable - if clients have loaned money and are receiving payments, use the Note Receivable option to reflect income received from those payments.

Businesses - input information about various types of businesses - LLC, Partnership, S Corp, or C Corp. This page has additional details on how to input business information.

Add even more assets

RightCapital is a powerful tool which empowers you to do financial advising, just right. There are many types of assets which may be included in a client's Net Worth. Learn how to add other types of assets here.

Frequently Asked Questions

1

How can I add the rate of return associated with each investment account?

Answer: The rate of return associated with each investment account is tied to the breakdown of cash, holdings and/or asset classes used to assign value. The assumptions tied to each asset class will determine the growth assigned to each account. To view the rate of return and standard deviation associated with each investment account, visit the Investment Tab > Asset Allocation > Current Allocation dropdown menu and select the account of your choice.

2

Are expense entered in the Net Worth included in future cash flows?

Answer: Any outflows listed in the Net Worth, such as credit card payments, insurance premiums, property tax and loan payments, are automatically factored into the future cash flow projections. Therefore these values should be excluded when entering living expenses in the goals & expense areas since they have already been added to the Net Worth.

3

What impact does the "Managed" checkbox have on a financial plan?

Answer: The "managed" checkbox is simply a visual representation of whether an asset is under the advisor's management. This checkbox will not impact future cash flow projections or AUM calculations.

4

How are holdings classified in RightCapital?

Answer: When individual holding are entered into an investment account, they are automatically categorized through Morningstar's asset allocation breakdown. These holdings are listed with the previous night's closing value and will update on a daily basis.